Cuba loosens control on restaurant cooperatives

Cuba announced on Tuesday that some cooperatives offering food and other services will be able to buy supplies directly from government producers and wholesale outlets for the first time, part of a wider but so far cautiously implemented market reform program.

The new rules mean some former state-run companies turned into cooperatives on the Communist-led island will no longer have to buy from more expensive retail outlets.

Odalys Escandell, first vice minister of domestic trade, said on the government’s evening news broadcast the move was “transcendental”, but Tuesday’s measures do not fulfill an earlier promise to let private restaurants do the same, leaving in place a key constraint on their business viability.

The steps, which go into effect on May 2, come just four days before a Communist Party Congress which is expected review market-oriented reforms begun five years ago.

The news report said wholesale outlets will be gradually established for the cooperatives. Over time, a series of products will be made available to them at lower prices, along with a tax cut, in exchange for setting price controls on the retail offer.

“Why are we establishing maximum prices? Because it is a system to protect the consumer,” Escandell said.

Cuba recently reversed an experiment to end state control of distribution of farm produce, after food prices rocketed above their previously subsidized levels.

Cuba has turned over to employees thousands of small state-run establishments, from coffee, snack and barber shops to locksmiths and shoeshine kiosks. The workers rent the premises and compete with private businesses on the open market.

The government has also ordered some 500 larger state-run establishments, from beauty salons to restaurants, to become cooperatives as a pilot project before thousands more follow suit.

Economy minister Marino Murillo made clear upon announcing plans to turn state-run businesses into cooperatives two years ago, that they would be favored over private businesses.